Tag Archives: Supreme Court

The Supreme Court today issued an important unanimous decision in Halo v. Pulse – vacating the Federal Circuit’s rigid limits to enhanced damages in patent cases. The decision rejects the dual objective/subjective test of Seagateas “inconsistent” with the statutory language of 35 U.S.C. §284. Rather, the court indicated that district courts have discretion to award enhanced damages where appropriate “as a sanction for egregious infringement behavior” and that those awards will be reviewed with deference on appeal. Although the district courts are given discretion, the opinion here makes clear that enhanced damages should not be awarded in “garden-variety cases.”

Section 284 gives district courts the discretion to award enhanced damages against those guilty of patent infringement. In applying this discretion, district courts are “to be guided by [the] sound legal principles” developed over nearly two centuries of application and interpretation of the Patent Act.[1] Those principles channel the exercise of discretion, limiting the award of enhanced damages to egregious cases of misconduct beyond typical infringement.

The Roberts opinion linked this case to that of Octane Fitness in which the court had earlier rejected a rigid Federal Circuit test for attorney-fee awards in favor of flexible discretion at the district court level.[2] In its decision, the Supreme Court also repeatedly cited its 19th century decisions as guidance.[3] However, rather than wholehearted acceptance of those old cases, the nuanced opinion walks through their reasoning and explains which continue to hold force today.

In thinking about enhanced damages, I find it useful to keep in mind that this issue only arises after a patent has been found enforceable and the accused found liable for infringement. Thus, any ‘excuse’ offered for the infringement at that point is insufficient to avoid liability but may still be sufficient to avoid an enhanced damage award. An important element of the decision is that of timing for the excuse. The opinion notes that an ex post defense generated for litigation is does not remove culpability. Rather, culpability will be measured according to the infringer’s knowledge at the time of the accused unlawful conduct.

Although the burden for proving egregious infringement behavior rests entirely upon the patentee, the court here held that clear-and-convincing evidence is not required to support an enhanced damages award. Rather, a preponderance of the evidence (more likely than not) is sufficient to support that award.

Although the court’s opinion was unanimous, Justice Breyer also provided a concurring opinion joined by Justices Alito and Kennedy. The concurrence suggests a more limited discretion for the district court – namely: (1) that mere knowledge of the patent is insufficient to prove willfulness; (2) failure to obtain advice of counsel cannot be used to prove recklessness (see Section 298); and (3) enhanced damages are not to be used to compensate the patentee for either the infringement or the hassle/cost of litigation.

Regarding the standard for review, Justice Breyer also offers an interesting statement supporting the Federal Circuit’s role as an ‘expert court’:

[I]n applying that standard [of deference], the Federal Circuit may take advantage of its own experience and expertise in patent law. Whether, for example, an infringer truly had ‘no doubts about [the] validity’ of a patent may require an assessment of the reasonableness of a defense that may be apparent from the face of that patent. And any error on such a question would be an abuse of discretion.

Despite this ‘experience and expertise’, I won’t look for the Supreme Court to begin giving deference to the Federal Circuit anytime soon.

Post Grant Admin: While we await Cuozzo, a set of follow-on cases continue to pile-up. My speculation is that the Supreme Court will delay any decision in those cases until it finalizes the outcome of Cuozzo. With a host of new friend-of-the-courtbriefs and interesting constitutional questions, MCM v. HP is perhaps best positioned for certiorari. Additional pending cases include Versata v. SAP (scope of CBM review); Cooper v. Lee(whether IPRs violate Separation of Powers); Click-to-Call Tech, LP v. Oracle Corp., (Same questions as Cuozzo and now-dismissed Achates v. Apple); GEA Process Engineering, Inc. v. Steuben Foods, Inc. (Flip-side of Cuozzo: Appeal when PTAB exceeds its authority by terminating an instituted IPR proceeding?); Interval Licensing LLC v. Lee (Same as Cuozzo); and Stephenson v. Game Show Network, LLC (Same as Cuozzo)

Design Patent Damages: Samsunghas filed its opening merits briefs in the design patent damages case against Apple. Design patent infringement leads to profit disgorgment, but the question is what profits? [More from Patently-O].

Versus Cisco: There are a couple of newly filed petitions. Interestingly, both filed by Michael Heim’s firm with Miranda Jones on both briefs representing plaintiff-petitioners. In both cases Cisco is respondent.

Of course, Commil was the subject to a 2015 Supreme Court decision that rejected the Federal Circuit’s original opinion favoring Cisco. On remand, the Federal Circuit completely changed its decision but again sided with Cisco and rejected the jury verdict — holding “that substantial evidence does not support the jury’s finding that Cisco’s devices, when used, perform the “running” step of the asserted claims.”

Safe Harbor for Federal Submissions: In the newly filed Amphastar Pharma case, the Supreme Court has already requested a response from Momenta. The question presented focuses on the safe-harbor provision of 35 U.S.C. § 271(e)(1) and asks: Whether the safe harbor protects a generic drug manufacturer’s bioequivalence testing that is performed only as a condition of maintaining FDA approval and is documented in records that must be submitted to the FDA upon request. The federal circuit held that Amphastar’s activity in this case was not protected by the safe harbor because it involved information “routinely reported” to the FDA post-approval. [Amphastar Petition]

Samsung has filed its opening merits briefs in its design patent damages appeal Samsung v. Apple. The central issue in the case is the proper statutory interpretation of the design patent damages statute 35 U.S.C. 289 that offers an alternative calculation for damages:

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.

The question for the court is “total profit” from what? Is it the sale of the article-of-manufacture (here, the Galaxy phones) or merely the particular component. For this case, the particular components would be the front face of the phone and the icon-grid displayed on a user interface screen. Samsung asks: Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component? [Samsung Opening Brief – US Supreme Court]

In a statement to Patently-O, Samsung argued that “If the current ruling is left to stand, it would value a single design patent over the hundreds of thousands of groundbreaking technology patents, leading to vastly overvalued design patents.” The itself brief cites Professor Rantanen’s 2015 essay for the proposition that the high damage is likely result in an “explosion of design patent assertions and lawsuits.”

The design-patent-damages statute was originally enacted in 1887 as a reaction to the last Supreme Court design patent damages cases that limited lost profit awards. Dobson v. Hartford Carpet Co., 114 U.S. 439 (1885); and Dobson v. Dornan, 118 U.S. 10 (1886). However, Samsung argues that the 1952 amendments are important here.

The Supreme Court has denied certiorari in Cubist Pharma v. Hospira. In the case, the patentee had challenged the Federal Circuit’s increasingly strong limits on the use of secondary indicia of non-obviousness. Bill Lee’s well written petition argued that the Federal Circuit’s approach conflicted with the flexible doctrine outlined in 35 U.S.C. 103 and explained by Deere and KSR. [CubistPetition].

Question Presented:

In Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966), this Court recognized the relevance of “objective indicia” of nonobviousness (also known as “secondary considerations”) – including the long-felt need for the patented invention, the failure of others to arrive at the invention, and the invention’s subsequent commercial success – in determining whether a patent’s claims were obvious to a person of ordinary skill in the art. In this case, the district court created, and the Federal Circuit affirmed, two categorical limitations on the consideration of objective indicia of nonobviousness that exist nowhere in the Patent Act or this Court’s jurisprudence. The questions presented are:

1. Whether a court may categorically disregard objective indicia of a patent’s nonobviousness merely because the considerations apply to one commercial embodiment of a patented invention, rather than all embodiments.

2. Whether a court may categorically disregard objective evidence of a long-felt need for a patented invention merely because the need is not expressly recited in the patent claims.

In its successful opposition, Hospira explained that both the district court weighed the secondary indicia of non-obviousness and found them “not sufficiently strong to overcome the showing of obviousness arising from an analysis of the prior art.” To Hospira, the petition was basically a request that the Supreme Court conduct its own factual analysis.

I had previously written that “[a]part from the AIA Trial challenges, the most potential life changing case on the docket for patent attorneys is Cubist v. Hospira that focuses on the role of secondary indicia of non-obviousness. As with most Supreme Court patent cases over the past decade, Cubist argues that the Federal Circuit’s rules are too restrictive and should instead follow a looser factor-based analysis when considering the issue.”

In today’s action, the court also denied certiorari in the subject matter eligibility case of Vehicle Intelligence v. Mercedes-Benz. Although scheduled for conference, the court took no action in the Cuozzo follow-on case of Stephenson v. Game Show Network, LLC, et al. — GVR is likely following release of the Cuozzo decision.

It is now time to begin looking for an opinion in the Halo/Stryker regarding whether the Federal Circuit’s test for willful infringement is too rigid. Those cases were argued in February 2016. We can also expect a decision in Cuozzo prior to the end June 2016.

Supplying Components Abroad: The Solicitor General has finally filed its brief in Life Tech v. Promega. The brief supports certiorari — but only for one of the two questions presented: namely,

whether a supplier can be held liable for providing ‘all or a substantial portion of the components of a patented invention’ from the United States when the supplier ships for combination abroad only a single commodity component of a multi-component invention

The patent in the case involves a DNA amplification kit used for personal identification. And, although the allegedly infringing kids were made in the UK, one commodity-component (the Taq polymerase) was supplied from the U.S. Focusing on the language of the statute, the Solicitor Generals argues that liability for export of a single component of a multi-component invention “is contrary to Section 271(f)’s text and structure, and it is inconsistent with the presumption against extraterritoriality.” Separately, the brief argues that the Federal Circuit was correct in its holding that a party can actively induce itself – thus 271(f)(1) inducement does not require a third party to be induced. [USPromega CVSG Petition].

Post Grant Admin: I previously discussed GEA Process Engineering. That case involves the Flip-side of Cuozzo and asks whether an appeal can follow when the PTAB exceeds its authority by terminating an already instituted IPR proceeding? The respondent (Steuben Foods) had previously waived its right to respond, but the Supreme Court has now requested a response. That move makes certiorari more likely, but the result will depend upon the outcome in Cuozzo.

A new petition in Automotive Body Parts, No. 15-1314, focuses on a question of civil procedure regarding a clerk’s transfer of a design patent case out of E.D.Tx in a manner that violated the local rules. Here, the clerk transferred the case immediately after the judge ordered transfer even though the local rules call for a 21 day delay. The case is rising through a petition for mandamus, but my view is that the petition fails to show why transfer is so harmful (except for the reality that patent plaintiffs are usually given more respect in E.D.Tx.).

The court was scheduled to discuss Cooper v. Lee at its May 12 conference. No action was taken following that conference – lightly suggesting to me that the court is holding judgment until it resolves Cuozzo. Apart from the AIA Trial challenges, most potential life changing case on the docket for patent attorneys is Cubist v. Hospira that focuses on the role of secondary indicia of non-obviousness. As with most Supreme Court patent cases over the past decade, Cubist argues that the Federal Circuit’s rules are too restrictive and should instead follow a looser factor-based analysis when considering the issue. In the next couple of weeks, the court will consider the Cubist petition as well as that of Dow v. NOVA (appellate review standard); Vehicle Intelligence (abstract idea); and WesternGeco (damages calculation for 271(f) infringement by exporting components).

Secret Offers to Sell: The Federal Circuit is not slowing down its patent jurisprudence in any way – except for the rash of R.36 affirmances. An important case is Helsinn that focuses on whether the AIA abrogated the rule in Metallizing Engineering.

Guest post by Dr. Shubha Ghosh, Crandall Melvin Professor of Law and Director of the Technology Commercialization Law Program at Syracuse University College of Law

In Stanford v Roche, 563 U.S. 776 (2011), the Supreme Court ruled that the Bayh-Dole Act did not create special rules of patent ownership for universities and other recipients of federal research funding. Traditional rules of inventor ownership and assignment, developed for for-profit entities applied to research institutes. Nothing in the language of the Bayh-Dole changed the basic rules and created a statutory automatic assignment (one analogous to work made for hire under the Copyright Act).

But what are the traditional rules for patent assignment? One issue the majority ignored in Stanford is the future interest assignment rule created by the Federal Circuit in Filmtec Corp. v. Allied Signal, 939 F.2d 1568 (Fed. Cir. 1991). By containing the phrase “hereby assigns,” the Federal Circuit stated in Filmtec, an assignment would have priority over another that only contained the word “assigns.” An assignor stating that he “assigns” a future interest is simply conveying a promise to assign in the future. However, the magic phrase “hereby assigns” is a present assignment of a future interest. Stanford University’s failure to include the word “hereby” in its assignment agreement lost patent rights to Roche, a competing assignee that showed the wisdom to include the word “hereby” in its agreement.

Justices Breyer and Ginsburg in dissent sharply criticized the Filmtec rule of “automatic assignment” through agreement in the Stanford case. This sentiment was echoed in Justice Sotomayor’s concurrence. All three justices, however, recognized that the assignment interpretation issue was not properly before the Court. Dr. Alexander Shukh, a computer hardware engineer, signed an assignment to his former employer Seagate. The assignment contained the “hereby” language sanctioned by the Filmtec decision. Seagate, and the Federal Circuit, reads the hereby language as creating an automatic assignment of Shukh’s rights to his inventions and resulting patents. The Shukh decision does not involve priority of assignments and goes beyond the Filmtec decision criticized by Justices Breyer, Ginsburg, and Sotomayor. Under Shukh, the magic words “ hereby assigns” extinguishes all rights of employees in their inventions.

The Court should grant Shukh’s certiori petition. This post demonstrates that there is a serious error of federal law that requires Supreme Court review. It also shows how the Court might correct the misapplication of federal law.

The Federal Circuit created the rule of automatic assignment through agreement without any basis in the Patent Act or in the common law of assignment. Acting from its institutional law as patent law expert, the Federal Circuit seemingly adopted the Filmtec rule as one of patent assignment. But, as Professor Ted Hagelin pointed out in a 2013 article in the AIPLA Law Quarterly, the automatic assignment rule has no foundation in the Patent Act. Section 261 speaks to writing requirements and priority rules arising from filing. There is no mention of the magic word “hereby” as a marker between promises to assign in the future and present assignments of future interests. Professor Hagelin recommended that Congress correct the error by amending Section 261.

But the Federal Circuit’s error is deeper than one of statutory misconstruction. Its decision confuses the relationship between patent law and contract law. The error is in the same category as the controversy over the conditional sale doctrine, a court created rule from Mallinckrodt v. Medipart, 976 F.2d 700 (Fed. Cir. 1992). In Mallinckrodt, the Federal Circuit examined a patent owner’s power to impose conditions on its grant of rights to a licensee. Through announcing the conditional sale doctrine, the Federal Circuit ruled that a violation of such conditions constituted patent infringement rather than contract breach. By so ruling, the Federal Circuit expanded its own jurisdiction by transforming questions of state contract law into those of patent law. A similar move occurs in Filmtec.

The usurpation of contract law by patent law is the subject of my 2014 article in the Journal of the Patent and Trademark Office Society. My argument in that paper is grounded, in part, in Judge Pauline Newman’s criticism of Filmtec in her dissent from denial of en banc review in Abraxis v. Navinta. 672 F.2d 1239 (Fed. Cir. 2011). According to Justice Newman, patent assignments are a matter of contract law, which is in the jurisdiction of the states. Therefore, the Federal Circuit should look more closely at state law in deciding cases about patent assignments.

The judge’s point is particularly salient when one remembers that the Federal Circuit was created as an expert patent court. It was given jurisdiction to hear some non-patent matters when these matters are related to patent cases. Patent assignments are one obvious example of when the Federal Circuit has jurisdiction to consider state matters. But, as Judge Newman points out, jurisdiction to hear a case does not mean authority to create new law, as the Federal Circuit arguably did in Filmtec and in Stanford. Instead, the Federal Circuit should look to other authorities to address non-patent law matters. For contract law matters, what state courts and legislatures have said about assignments generally would be relevant. Furthermore, state law provides a stable and predictable source of authority for actors engaged in the business practice of negotiating patent assignments and other contracts.

The core problem is that the court has ignored the Erie doctrine. Under the Supreme Court’s 1937 decision in Erie v. Tompkins, a federal court ruling on a matter of state law under its diversity jurisdiction must apply the law of the state from which the dispute arose. Which state law to apply is a matter of choice of law principles. What the federal court cannot do is create its own federal common law in lieu of the state statutory or common law. As the Court affirmed in Butner v. United States, 440 U.S. 48 (1979), the Erie doctrine applies to a court’s supplemental jurisdiction over state law claims attendant to a federal question. By creating its own federal common law of contracts, the Federal Circuit reveals a fundamental error in its understanding of the federal court system.

State law offers a different analysis of patent assignments from what the Federal Circuit adopts. Justice Breyer, in his Stanford dissent, cited a treatise on patent law by George Ticknor Curtis from 1873 that discusses patent assignments. Curtis addresses how state law treats assignments and cites a Massachusetts case from 1841 dealing with patent assignments. Relevant to the issues in Stanford, the assignment involved the present assignment of an invention that had not been made yet. The court analyzed the assignment as it would any contract, identifying the terms of the document as a key to the expectations of the parties. State law precedents perhaps offer an alternative to the questionable Federal Circuit jurisprudence, at least with respect to patent assignments.

One related area in state law is that of security interests, a part of debtor-creditor law. In entering into credit agreements, creditors ask for security in the form of collateral for a loan. The collateral may be a legal interest that is not in existence at the time of the loan. An example would be the future sales or proceeds from a debtor’s business. Another example would be inventory remaining at the end of an accounting period. These future interests are analogous to the future inventions or patents that I have been discussing. Rights can be claimed in these properties that are nonexistent at the time of the contract formation between creditor and debtor.

Security interests provide the most common situation in which conflicting obligations arise. Debtors often take multiple mortgages, hypothetic future proceeds to multiple creditors, and take multiple loans out on the same collateral. As long as the value of the collateral can cover all the debts, then there is no problem in general. However, if not all creditors can be satisfied, priority rules are necessary. In the case of future interests, the law does not fall back on simple rules like first in time because there are multiple interests involved. A creditor does not want to run the risk of not receiving any return on the debt. The legal rules of priority allow the creditor to investigate the collateral and through such due diligence identify competing claimants on the collateral. Priority rules, consequently, depend not only on the timing of the contract, but also on recording and notice requirements.

The case of conflicting patent assignments bears some similarity to the law on intangible future interests in creditor-debtor law. Both entail rights in property that has yet to come into being. The main lesson from creditor-debtor law, which is largely a matter of state law, is that many interests are implicated and therefore simple rules are not satisfactory. The Federal Circuit has arguably adopted too simple and misguided a rule in the Filmtec. The Supreme Court has confounded the error in the Stanford decision by ignoring the issue of automatic assignments. One way to correct course is by granting Shukh’s petition for certiori and restore the proper balance between federal patent law and state commercial law.

Laches: The Supreme Court granted SCA’s writ of certiorari on the question of whether laches defense applies to block back-damages in patent cases. The Federal Circuit says “yes” while the Supreme Court recently said “no” in a parallel copyright case (Patrella). The Supreme Court decided Patrella 6-3 with Justice Scalia in the majority offering the potential of a tight-split in this case. The court looks to be sitting-on the parallel case of Medinol v. Cordis until SCA is decided.

Copyright on Useful Articles: Although not a patent case, the court also decided to hear a “useful article” copyright case. Star Athletica v. Varsity Brands. The case asks whether the stripes and chevrons found in a cheerleader uniform are sufficiently “separable” from the uniform in order to be copyrightable. The useful article doctrine is generally considered to be setting up a boundary line between the domains of copyright and patent.

[MCM Petition and Appendix] MCM’s brief was filed Tom Goldstein along with Ned Heller. The question for the Supreme Court is whether to extend or contract from its position in Stern v. Marshall, 131 S. Ct. 2594 (2011) where the court held that Article III of the U.S. Constitution prohibits Congress from withdrawing “from judicial
cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.” Quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272 (1856)).

The brief raises a set of interesting old cases focusing both on the separation of powers and the tradition that patent-revocation for invalidity requires a jury to decide disputed facts.

Cooper v. Lee raises some parallel issues. Its petition will be considered by the Court in its May 12. [Update: The court has “rescheduled” consideration of Cooper’s brief – perhaps awaiting its own determination in Cuozzo.]

Hereby Assign Future Inventions: In Shukh v. Seagate, the petitioner raises the long-brewing question involving the Federal Circuit’s interpretation of patent assignments. In particular, the Federal Circuit has ruled – as a matter of federal patent law – that patent rights are assignable before their invention is even contemplated. The petition asks:

[W]hether FilmTec’s “automatic assignment” rule should be overruled because it extinguishes inventors’ constitutional and statutory rights to inventorship and ownership.

In Stanford v. Roche, Justices Breyer, Ginsburg and Sotomayor criticized the Federal Circuit’s rule and suggested that the issue should be presented in a future case. The majority expressly noted that its opinion did not decide the issue. [Shukh v. Seagate – Redacted Public Petition]

Disparaging Trademarks: A pair of disparaging trademark cases have also been petitioned: Lee v. Tam (“Slants”) and Pro-Football v. Blackhorse (“Redskins”). The Federal Circuit previously held the limit on registering disparaging marks to be an unconstitutional abrogation of the freedom of speech.

The Supreme Court has granted SCA Hygeine’s petition for writ of certiorari with merits briefing over the summer and a likely fall 2016 hearing on the question:

Whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period, 35 U.S.C. § 286.

SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, Supreme Court Docket No. 15-927 (2016). This case is another patent-copyright parallel and follows the Supreme Court’s 2014 copyright laches case in Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014). In Petrella, the Supreme Court held that laches cannot be used to further shorten the three-year copyright limitations period set forth in 17 U.S.C. § 507(b). Following Petrella, however, the Federal Circuit rejected the copyright parallels and instead embraced patent law exceptionalism — holding en banc that laches remained a viable defense and can bar infringement claims accruing within the six-year limitations period of 35 U.S.C. § 286. (6-5 holding).

In both patent and copyright cases the issue of laches arises more often than you might think because of the legal treatment of “ongoing” infringement. Each infringing act is seen as a new act of infringement. Thus, the six-year limits period starts anew each time a new copy of the infringing product is made, sold, or used. If someone has been making an infringing product for the past 10 years, the statute would let the patentee them reach back 6 years for damages. Courts often see that result as as problematic when the patentee sits on its rights for so long (and since most civil claims have a shorter period of limitations) and thus apply the laches doctrine to limit collection of back damages even when within the six-year period.

Look for the court to reverse the Federal Circuit’s ruling based upon the historic interplay between equity and law. As in Petrella, I expect that the court will base its decision on the rule that that laches is a defense to equitable relief but does not limit the recovery of legal damages. Although Petrella was 6-3, I expect that the dissenters will see the value in linking patent and copyright regimes.

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The court also granted certiorari in Star Athletica v. Varsity Brands – that case focuses on the functionality doctrine in copyright law. In particular focusing on copyrightability of the stripes and chevrons integrated into cheerleader uniforms. Question presented: What is the appropriate test to determine when a feature of a useful article is protectable under § 101 of the Copyright Act?

The petition outlines the ten-different-tests that folks use to determine whether the work of authorship is capable of being “identified separately from, and … existing independently of, the utilitarian aspects of the article.”

Cuozzo: Prof Mann provides his preview of the April 25 oral arguments in Cuozzo v. Lee; and Cuozzo has filed its reply brief. Neither document address my the mootness concern regarding Cuozzo’s demand for an ordinary construction of claim terms rather than their broadest reasonable interpretation. As far as I have seen, nothing in the record suggests that a change in claim interpretation standard would alter the PTO’s determination.

Following its April 15 Conference, the Supreme Court denied certiorari in a set of cases, including Vermont v. MPHJ; Limelight v. Akamai; Hemopet v. Hill’s Pet Nutrition; and Tas v. Beachy. In its April 1 Conference, the Court denied cert in Retirement Capital v. US Bancorp. That case had questioned whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2).

The only patent cases surviving the April 15 conference are (1)Interval Licensing v. Lee that asks the same question as Cuozzo: Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?; and (2)Medinol v. Cordis that focuses on whether “the equitable defense of laches [may be used to] bar legal claims for damages that are timely under the express terms of the Patent Act.” Medinol is conceptually linked to the SCA Hygiene case that also raises the laches issue. The court will consider both cases in its April 22 conference and may likely couple the decision to grant/deny. The court is also scheduled to consider Cloud Satchel (abstract idea eligibility) and Globus Medical (appellate jurisdiction) at Friday’s conference. Neither of these cases offer much hope for the respective petitioner.

In Cooper v. Lee, the US Government filed its brief opposing certiorari. The government argues that Cooper’s Article III challenge to the IPR system “lack’s merit.”

[P]atents are quintessential “public rights” whose issuance and cancellation Congress may permissible entrust to a non-Article III tribunal. . . . Pursuant to its constitutional authority to “promote the Progress of Science and useful Arts” by establishing a patent system, Congress created the PTO – an agency with “special expertise in evaluating patent applications.” Kappos v. Hyatt, 132 S. Ct. 1690 (2012). It directed that agency to issue a patent if “it appears that the applicant is entitled to a patent” under standards set by federal law, 35 U.S.C. 131. Patents are accordingly rights that “exist only by virtue of statute.” Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 n.5 (1964). They “dispose of public rights held by the government on behalf of the people.” Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 849 n.2 (2015) (Thomas, J., dissenting).

The government also argues that the posture of the case lacks merits – in particular that Cooper’s collateral challenge to the procedures doesn’t work. Cooper has argued that “inter partes review violates Article III of the Constitution by authorizing an Executive Branch agency, rather than a court, to invalidate a previously issued patent.”

Daniel Bohnen has filed a brief on behalf of UK’s Chartered Institute of Patent Attorneys (CIPA) in support of the Sequenom v. Ariosa petition. The brief argues that the court should look to “maintain international harmonisation in the law of patent-eligibility.”[AriosaCIPA]. More briefs in support of the petitioner are expected this week as is Ariosa’s opposition brief (if any).

Finally, Nova has filed its opposition in Dow v. Nova and is attempting to refocus attention on the merits of the indefiniteness decision rather than the procedure for reaching that decision. The difference in question presented is interesting:

Dow: Whether factual findings underlying a district court’s determination on the definiteness of a patent claim under the Patent Act, 35 U.S.C. 112, like a district court’s factual findings underlying construction of a patent claim, are subject to appellate review only for clear error or substantial evidence rather than de novo review.

Explaining its shift of the question, Nova argues that “Dow’s petition rests on a false premise that the Federal Circuit refuses to give deference to factual findings” that underlie the definiteness determination. Nova is correct as to the Federal Circuit’s position — the only question here is whether the Supreme Court will order the appellate court to follow its own law in this case. [DowPetition][NovaOpposition]

The timing of a settlement is sometimes really important for patentees — especially if a court is about to find your patent invalid.

Slightly complex story: In Cardpool v. Plastic Jungle, the district court ruled on summary judgment that Cardpool’s gift-card-exchange patent claims invalid under 35 U.S.C. 101 and dismissed the case with prejudice. U.S. Patent No. 7,494,048. That decision was initially affirmed by the Federal Circuit in a R.36 Judgment Without Opinion. Shortly thereafter, however, the USPTO issued a reexamination certificate finding the claims (as amended in reexam) patentable (of course, the PTO did not consider eligibility but only novelty and nonobviousness).

The timing of the reexamination certificate gave Cardpool the opportunity to request rehearing from the Federal Circuit. The appellate court agreed and vacated its prior summary affirmance (although not the district court’s opinion) and remanded to the district court to consider the impact of the reexamination changes.

The parties apparently came to some agreement and thus on remand the parties jointly moved for the district court to vacate its invalidity judgment since the claims had been amended and since the PTO certificate issued before the appellate mandate. See Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1346 (Fed. Cir. 2013).

However, the district court rejected the plea for vacatur — finding that the PTO decision does not “displace a district court judgment” and that it would be “against the public interest” to allow a patentee to overcome an invalidity judgment simply by “amending its invalid claims.”

No Vacation: Now, on appeal again, the Federal Circuit has affirmed the lower court ruling that vacatur is not necessary or proper:

The Supreme Court counsels that “vacatur must be decreed for those judgments whose review is . . . ‘prevented through happenstance’—that is to say, where a controversy presented for review has ‘become moot due to circumstances unattributable to any of the parties.’” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 23 (1994).

Here, the mootness is due to amendments made by the patentee. As such, the appellate court refused to vacate the district court judgment.

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Res Judicata: What is unclear here is the level of claim & issue preclusion that will apply going forward when Cardpool asserts the patent against some third party. Claim 1 was found invalid by a final judgment. However, Claim 1 has now been amended. Could Cardpool sue Plastic Jungle (or its assigns) on the revised Claim 1? Could Cardpool sue an unrelated alleged infringer? Writing for the majority, Judge Newman suggests (but does not hold) that Cardpool will be able to do so:

On the facts and procedures of this case, the issue of validity of the reexamined claims remains to be addressed in any future proceeding. In the initial proceeding the original claims were adjudicated only on the ground of subject matter eligibility under section 101. As in Aspex, the effect of a prior judgment rendered on specific issues as applied to the original claims, depends on the facts and issues of the reexamination, and invokes equity as well as law.

I pulled-up the reexamined claims and found that they were extensively amended to require that the method be computer-implemented using a processor, computer program, data requests, validation process by the processor, etc. I would be truly surprised, if these amendments are sufficient to overcome the Alice Corp. test for eligibility (as implemented).

I’m looking forward to the Federalist Society teleforum this Friday, April 8, 2016 at 2:00 pm EST on the topic: Intellectual Property in the Supreme Court. I will be moderating. Speakers include Garrard Beeny who is a partner at Sullivan & Cromwell and co-counsel for both Cuozzo and Stryker; and Matthew Hellman who is a partner at Jenner & Block and co-counsel for Wiley & Sons in Kirtsaeng. The one-hour audio-only program will include time for Q&A.

No registration necessary, just call in at 2:00 pm to: (888) 752-3232. More details here.

Design Patent Damages: The Supreme Court has granted Samsung’s petition for writ of certiorari on the issue of design patent damages under 35 U.S.C. 289. The statute allows for disgorgment of the infringer’s “total profit,” but the question is total-profit-as-to-what? Certainly not the entire company. The Federal Circuit has ruled that the total profit applies to the article of manufacture (here a mobile phone) while Samsung argues that the profit should be reduced to the profits associated with the component at issue (the screen). The Supreme Court rejected the second proposed issue of design patent scope.

No Standing for Cuozzo?: I wrote some about the standing and appellate jurisdiction issue in Cuozzo earlier this week. [Link]. Up to now, Cuozzo has not explained how a Phillips claim construction would impact the outcome of its inter partes review. Cuozzo’s reply brief may address that issue – either way they almost have to come-up at oral arguments under questioning from Justice Breyer or Justice Sotomayor.

Post Sale Restraints: A key new petition was filed in Impression Products v. Lexmark on the issue of patent exhaustion and the extent that a manufacturer can rely upon patent rights to create post-sale use requirements and restrictions and limits on international trade. [Link]. In Sequenom, v. Ariosa, the court is subtly asked to reconsider and scale-back the language of Mayo v. Prometheus. The petition actually asks the court to stop mis-interpreting Mayo. [Link]. Vehicle Intelligence and Safety as well as Cloud Satchel also raise Section 101 challenges, but those cases are battling long odds.

Reviewing a Jury Verdict of Definiteness: New petition Dow v. Nova raises the interesting question regarding the standard for appellate review of factual findings that serve as the underlying basis for a definiteness determination. Based upon a logical extension of Teva v. Sandoz, those factual findings should be given deference even though the ultimate determination of definiteness is a question of law. An important distinction from pure claim construction is that (as here) juries may be tasked with the job of ruling whether a claim is indefinite. In that situation, the juries do not separate their factual conclusions from legal conclusions creating some amount of confusion. The original Federal Circuit opinion cited to Teva, but not for its holding regarding deference. I would not be surprised by a GVR order from the Supreme Court asking the Federal Circuit to reconsider based upon that holding. [DowPetition].

Flexible Obviousness Test Does Not Apply to Secondary Indicia of Nonobviousness: In Cubist Pharma v. Hospira, the petitioner-patentee challenges the Federal Circuit’s increasingly bright line limits on secondary indicia of nonobviousness. How do those limits mesh with the flexible doctrine outlined in Section 103 and explained by Deere and KSR. [CubistPetition].

Did the AIA Shrink Federal Circuit Appellate Jurisdiction?: Finally, in Globus Medical, the question focuses on Federal Circuit jurisdiction over appeals in former-patent-cases, but where the only issue appealed is a non-patent issue. This same issue was previously decided in favor of Federal Circuit jurisdiction. However, the AIA modified the language of the Federal Circuit appellate jurisdiction statute and opened the door to a re-visitation. 28 U.S.C. 1292. However, the argument barely carries the weight of its linguistics if that.

Previously, the Federal Circuit had appellate jurisdiction over cases if the district court’s jurisdiction could at least in-part be traced to 28 U.S.C. 1338 (giving district court’s jurisdiction over patent cases). The AIA amended the statute to give appellate jurisdiction to the Federal Circuit in any “civil action arising under” the patent laws. Since appellate jurisdiction ordinarily attaches at the notice-of-appeal filing stage, Globus Medical argues that former patent cases no longer “arise under” the patent laws once final judgment is issued and no patent questions are appealed.

Parkervision, Inc. v. Qualcomm Incorporated, No. 15-1092 (“Whether and under what circumstances an inconsistency in expert testimony permits a court to set aside a jury verdict and grant the losing party judgment as a matter of law.”)

Achates Reference Publishing, Inc. v. Apple Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB) [Note – This case was dismissed after being settled by the parties]

Oral arguments in Cuozzo v. Lee are set for April 25, 2016 addressing two particular questions:

Whether the PTO may require that, during an inter partes review, the claims in a patent will be given the “broadest reasonable construction” consistent with the patent’s specification [as opposed to the standard construction for issued patents].

Whether a party may seek to overturn the PTO’s final decision in an inter partes review based on an alleged error in the PTO’s threshold decision to institute the review, which Congress provided “shall be final and nonappealable,” 35 U.S.C. 314(d).

The U.S. Government has also filed its responsive merits brief. The brief appears to be a joint effort of the Solicitor General (DOJ) and the USPTO and does a solid job of justifying its positions:

On BRI:

Historical: The PTO has “long applied the broadest reasonable-construction standard in all agency proceedings in which patent claims may still be amended.”

Statutory: Here, although claim amendments have allowed in only exceedingly rare cases, the IPR statute does suggest that amendments are possible. (Of course, once the motion to amend is denied, then claims cannot ‘still be amended.’

Deference: The USPTO was given rulemaking authority in this area (AIA procedures) and the BRI standard is a exercise of that delegated authority. (It is unclear what happens if the court would find this ‘substantive’ rather than ‘procedural’ and what level of deference should apply in either case).

On Appeal of Decision to Institute:

Statutory: “The statute bars all judicial review, not just interlocutory appeals, of the PTO’s decision whether to institute an inter partes review.” Rather, judicial review is limited to the Agency’s final decision on patentability.

Policy: The no-review approach fits the AIA-Trial purpose of being “an efficient non-judicial alternative for testing the patentability of issued claims.”

The PTO is looking for a strong decision in this case to effectively shut-down the myriad challenges it is currently facing.

This morning, the Supreme Court granted certiorari on the design patent remedies question in Samsung Electronics Co. v. Apple Inc. It did not grant certiorari on the functionality/ornamentality question raised in Samsung’s petition.

The question presented is:

2. Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

This case is particularly interesting to me, as this afternoon I’m giving a talk at the Washington & Lee School of Law on a current work in progress on the Takings Clause and changes to substantive patent law. I’ll be touching on the design patent remedies issue as an area of potential tension–regardless of how this decision turns out, it will be an imporant subject to keep an eye on!

President Obama has announced his nomination of Merrick Garland to become the next Supreme Court Justice. Garland is Chief Judge of the D.C. Circuit Court of Appeals and would bring tremendous intellectual firepower to the Court and is clearly more moderate many potential nominees. All indications indicate that President Obama is correct in his appraisal of Garland as “widely recognized not only as one of America’s sharpest legal minds, but someone who brings to his work a spirit of decency, modesty, integrity, even-handedness and excellence.” That said, there is little chance that Garland will be confirmed except perhaps after the election (assuming that a Democratic contender wins).

Samsung’s design patent case is looking like a strong contender for grant of certiorari. The court will again consider the case this week. We continue to await the views of the solicitor general in Life Tech v. Promega (whether an entity can “induce itself” under 271(f)(1)) (CVSG requested in October 2015).

The key new petition this fortnight is Versata v. SAP. Versata raises four questions stemming from the USPTO’s covered business method (CBM) review of its “hierarchical pricing engine” patents.

Whether the phrase “covered business method patent”—and “financial product or service”—encompasses any patent claim that is “incidental to” or “complementary to a financial activity and relates to monetary matters.”

Whether the Federal Circuit’s standard for identifying patents falling within the “technological inventions” exception departs from statutory text by looking to whether the patent is valid, as opposed to whether it is “technological.”

Whether a software-related invention that improves the performance of computer operations is patent eligible subject matter.

Whether, as this Court will decide in Cuozzo Speed Technologies, LLC v. Lee, No. 15-446, the Patent Trial and Appeal Board should give claim terms their broadest reasonable construction in post-grant adjudicatory proceedings, or should instead give them their best construction.

Jeff Lamkin and his MoloLamkin team filed the brief. [Versata Cert Petition]. SAP is on the hook for a $300+ million verdict if Versata is able to win this appeal.

The second new case is Tas v. Beach (written description requirement for new drug treatments). Tas is a Turkish researcher representing himself pro se in the interference case against Johns Hopkins. Interesting issues, but the case has no chance. No cases have been dismissed or denied.

I pulled up MPHJ’s response to Vermont’s petition (filed by Bryan Farney). The opening paragraph spells out the case:

This “groundbreaking” case, as Petitioner describes it, has been going on, unjustifiably and unconstitutionally, for nearly three years now – all because Petitioner has refused to admit or accept that its state law claims against MPHJ are preempted by federal law, barred by the First Amendment “right to petition” clause, and that Congress has decided that federal preemption questions involving the patent laws must be decided by the federal court system.

Jury Role: Parkervision, Inc. v. Qualcomm Incorporated, No. 15-1092 (“Whether and under what circumstances an inconsistency in expert testimony permits a court to set aside a jury verdict and grant the losing party judgment as a matter of law.”)

Achates Reference Publishing, Inc. v. Apple Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB) [Note – This case was dismissed after being settled by the parties]

Earlier this week, the University of Missouri Law Review held its annual symposium – this year focusing on the Future of the Administrative State. That future is a primary front of challenge in the patent system. Arguments in Cuozzo v. Lee are now scheduled for April 25. Jeffrey Wall of Sullivan & Cromwell (who also argued Stryker/Halo two weeks ago) is representing Cuozzo along with his colleague Garrard Beeney. On that same day, the Supreme Court will also hear the copyright attorney fee case Kirtsaeng.

Jury Role: Parkervision, Inc. v. Qualcomm Incorporated, No. 15-1092 (“Whether and under what circumstances an inconsistency in expert testimony permits a court to set aside a jury verdict and grant the losing party judgment as a matter of law.”)

Achates Reference Publishing, Inc. v. Apple Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB) [Note – This case was dismissed after being settled by the parties]

Justice Scalia died this week. May he rest in peace. Although he (as well as Justice Kagan) had left the University of Chicago before I arrived, their influence continues to be felt in that institution. (Posner, Obama, Sunstein, Meltzer & Epstein, etc. were all still around). On her blog, Professor Ouellette (Stanford) has a nice post about the mixed bag of Justice Scalia’s IP scholarship legacy. Most recently, Justice Scalia may be best remembered for calling-out Federal Circuit jurisprudence on obviousness as “gobbledygook.” In many cases, I would expect that his ‘vote’ was less important than the ideas he brought to the table and the way he changed the debates.

I don’t see Scalia’s death having any impact on Halo/Stryker — where I predict the Federal Circuit will be reversed. Cuozzo is perhaps a different story where I expect a divided court to affirm in a situation where Justice Scalia may have voted to reverse. Oral arguments are still set for February 23, 2016 in Halo and Stryker. Tony Mauro has an interesting article on the case titled “Coin toss decides which advocate will argue key patent case.” Professor Mann provides an argument preview on SCOTUSblog.

New petitions this week include the reappearance of Limelight v. Akamai. The Supreme Court previously shot-down the Federal Circuit’s expanded definition of inducing infringement, but on remand the Federal Circuit expanded its definition of direct infringement (to include joint enterprise liability). The case is interesting and I hope that the court grants certiorari, but I would side with the patentee here.

In Medinol v. Cordis, the patentee questions whether the laches doctrine still applies in patent cases. This case parallels SCA Hygiene and comes on the heels of the Supreme Court’s Petrella decision which eliminated the laches defense for back-damages in copyright cases.

Briartek IP v. DeLorme, delves into interesting separation of powers and jurisdiction issues, asking: Whether a binding consent order, entered between the federal government, the ITC, and an ITC respondent, deprives federal district courts of jurisdiction over a declaratory judgment action, seeking to invalidate the patent at issue, filed by the ITC respondent … against the patent holder: a non-party to the consent order. The Federal Circuit had affirmed without substantive opinion.

Finally, last but not least, is Click-to-Call Tech v. Oracle Corp. who has copied the questions from Cuozzo and the recently denied Achates v. Apple. These questions challenge the seeming the absolute bar on judicial review of Patent Trial & Appeal Board’s power to institute IPR proceedings. Although this particular petition is unlikely to be granted. It lends additional credence to the other two. The petition is also a mechanism for the patentee here to keep the issue alive.

My starting point for thinking about patent infringement begins with the recognition that the corporate defendants held liable for patent infringement ordinarily do not themselves make or use the patented invention. Rather, in most cases, it is employees, contractors, and employees of those contractors who take the actual infringing acts that are then attributed to the accused infringer. This case looks to boundary conditions for finding, under the law, when third-party activities are so attributable.

The Limelight v. Akamai dispute involves a system of using a distributed set of servers for avoiding congestion while delivering internet content. The approach is used by media giants such as Netflix and others. The distributed nature of the technology creates a good likelihood that different business entities will control various aspects of the system. A concern for a patentee in this situation is that, although the patented invention is being used, no single entity is liable for infringement (applying the all elements rule).

In its 2014 Limelight decision, the Supreme Court held that infringement-by-inducement requires evidence of underlying direct infringement. After remand, the Federal Circuit then expanded the contours of direct infringement. According to the court, direct infringement requires that all steps be “attributed” to a single entity and can be attributable “when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.” likewise “where two or more actors form a joint enterprise, all can be charged with the acts of the other.”

Now, Limelight has asked the Supreme Court to once again review the case. The question presented is:

Whether the Federal Circuit erred in holding that a defendant may be held liable for directly infringing a method patent based on the collective performance of method steps by multiple independent parties, even though the performance of all the steps of the method patent is “not attributable to any one person” under traditional vicarious-liability standards.

Limelight’s strongest argument is that the Federal Circuit’s decision represented an undue expansion of rights. Unfortunately, I don’t give the case much chance of success. The brief primarily argues that – on the facts – no liability exists and that – before the most recent Federal Circuit decision – the courts had previously found no direct infringement. The Supreme Court is unlikely to take-up a full review of factual proof in this 10-year-old complex patent case. Likewise, none of the prior decisions focused on how those facts applied to the question of joint enterprise liability.

With Washington DC snowed-in, action within the Supreme Court has also been somewhat slow. Briefing is now complete in ePlus v. Lawson. In that case, a district court originally held an adjudged infringer in contempt-of-court for refusing to comply with its injunction order. Following the contempt order, the USPTO independently cancelled the patent claims and, at that point, the Federal Circuit vacated both the injunction and the contempt order. ePlus presents the following questions:

1. Whether civil contempt of a permanent injunction order that has been affirmed on appeal and is binding on the litigants under the law of judgments, may be set aside based on a legal development that came after both the permanent injunction and the contumacious conduct, and that did not call into question the correctness of the injunction when it was entered.
2. Whether, under Plaut v. Spendthrift Farm, 514 U.S. 211 (1995), the PTO, an administrative agency, may issue an order that retroactively overrides a federal court’s judgment on a question of law that is not subject to further judicial review, so long as some other part of the litigation is pending.

BIO/PhRMA filed a brief in support of the petition. The ePlus case is one of several challenging the structure of administrative review proceedings running in parallel with court litigation. William Jay (Goodwin Proctor) is representing ePlus with Mark Perry (Gibson Dunn) on the other side.

Oral arguments for the parallel willfulness cases of Halo and Stryker are set for February 23, 2016. The cases are consolidated to a single one-hour hearing. The attorneys for Halo/Stryker will chose a representative who gets 20-minutes; the US Department of Justice (who generally supports the Halo/Stryker position) will have 10-minutes of oral arguments; and Pulse/Zimmer will choose an attorney for a 30-minute opposition. For those attending, the other case being heard that day is the criminal case of Taylor v. US involving the Hobbs Act that creates federal criminal liability for “interference with commerce by threats of violence.” 18 U.S.C. 1951. The question is whether the required element of interstate commerce must be proven beyond a reasonable doubt in order to obtain a criminal conviction.

A new petition for certiorari has been filed in Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers). The petition by Robert Greenspoon links itself with the Cuozzo challenge — noting that Cuozzo raises the “smaller issue” while Cooper raises “larger issues.”

Other new petitions include a filing from Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea) and Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations). The Federal Circuit decided Joao Bock with a R.36 affirmance (without opinion affirming that claim 30, et. al, of U.S. Patent No. 7,096,003 are invalid as effectively claiming abstract ideas). Regarding Nordock, although it is not as high profile, its simplicity may make it a better vehicle than Samsung v. Apple for challenging design patent damage calculations. In any event Nordock’s timing is good and I would expect that the court will at least withhold judgment until it decides whether to grant certiorari in Samsung v. Apple.

This week, the Supreme Court granted certiorari in the administrative patent review case of Cuozzo v. Lee. Cuozzo raises the following two questions: (1) Whether the court of appeals erred in holding that, in inter partes review (IPR) proceedings, the Patent Trial and Appeal Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning; and (2) whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable. The petitioner (Cuozzo) now has forty-five days to file its opening merits brief with amici briefs due one week later.

The other major patent issue before the court this term involves the enhanced damages questions raised in the parallel cases of Halo and Stryker. Oral arguments are set for those cases for February 23, 2016. Although not a party, the Solicitor General has requested permission to participate in oral argument as amicus curiae and for divided argument filed. The US Government generally supported the petitioners’ position that the Federal Circuit has unduly limited the availability of enhanced damages for willful infringement and other egregious acts by an adjudged infringer.

This week, the Supreme Court also issued a GVR in Medtronic v. NuVasive – ordering the Federal Circuit to reconsider whether the mens rea evidence presented was sufficient to prove active inducement under Commil.